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Japan Tobacco Inc.’s Canadian unit was granted creditor protection by the Ontario Superior Court after a legal defeat over the risks of smoking threatens the existence of tobacco companies in the country.

The court extended protection in favor of JTI-Macdonald Corp. after the company argued that the damages award in the case of up to 1.77 billion Canadian dollars ($1.32 billion) exceeded its capacity to pay, Japan Tobacco said in a statement. JTI-Macdonald filed for protection from its creditors on March 8.

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